Chapter 8 Flashcards
what is an investment?
the purchase of capital resources used to produce goods and services
what are the 3 most common forms of short-term financing?
- trade credit
- loans from financial institutions
- loans from other companies
what company did warren buffet make
Brookshire hathaways
what is equity?
ownership in a business
what is a common stock?
a claim to a share of the profits of a company after all expenses and taxes are paid
what is a preferred stock?
issued nonvoting stocks
what is a bear and bull market?
bull is a market that is on the rise and a bear is receding where most stocks are declining in value
what president 1st regulated the stock market?
FDR
what are 2 major ways business save?
- depreciation
2. retained earnings
what is depreciation?
the value lost in assets like tools and machines as they wear out or become obsolte
what is retained earnings?
profits less taxes not paid as dividend but reinvested for new capital
what are 4/7 sources for funding small firms?
- personal savings
- family and friends
- forming a partnership
- selling stock
NYSE stands for?
New York Stock Exchange
NYSE definition?
lists more than 3,000 large and mid-sized companies worth more than 20 trillion dollars
AMEX stands for?
American Stock Exchange
AMEX definition?
lists more than 700 common stock
NASDAQ stands for?
National Associations of Securities Dealers Automated Quotation System
NASDAQ definition?
lists more than 5000 companies (tech)
what is prospectus?
a statement of fincial info published when a corp is about to issue new securities
What is the fundamental accounting equation?
assets- liabilities = net worth
what does SEC stand for?
Securities and Exchange company
what is the SEC?
an agency of the federal government that is responsible for protecting investors in the sale of securities
